McDonald's

Two California brothers turn the restaurant industry upside down with a drive-in

MAURICE McDONALD (1902-1971) RICHARD McDONALD (1909-1998)

Mac (Maurice) and his younger brother Dick (Richard) McDonald were both in their 20s when they left New Hampshire in 1930 to try their luck on the West Coast.

They did not want to follow in the footsteps of their father, who had worked all his life as a foreman in a shoe factory and had become unemployed in 1929 when the economic crisis broke out.

One after another shoe wool mill in and around New Hampshire closed, magical California offered the opportunity to start a new life.

They settled where they thought they had the best opportunity: in Hollywood. They were able to work as stagehands, mainly on one-man shows and on slapsticks starring Ben Turpin. The emerging film industry gave them the idea of opening a cinema in neighboring Glendale. In the four years that followed, they rarely managed to put the $100 monthly rent on the table. Dick and Mac discuss the design of a new billboard. Only through the goodwill of the landlord could they keep their doors open. They looked for new opportunities to make a fortune and eventually found them in a new kind of hospitality business that was making waves in California during those years: the drive-in restaurant.

Nowhere in the world at that time was the car more widespread than in California. Drive-in restaurants started springing up in 1932. Sometimes they were just large parking lots where the customers were served in their cars by carhops, waitresses in uniform.

There was nothing too crazy to speed up the service. Some girls moved on roller skates, elsewhere there was a telephone pole in every parking lot where you could place your order.

The drive-in the McDonald brothers opened east of Pasadena in 1937 was tiny.

While Dick and Mac's hot dogs - no burgers! – and preparing milkshakes and serving the customers who could sit on a dozen chairs under an awning, three carhops provided the visitors in the parking lots.

San Bernardino

In 1940, they opened a significantly larger drive-in on the corner of 14th and E in San Bernardino, about 90 miles east of Los Angeles.

It was a quintessentially American working-class town, an orange-growing hub, where Mac and Dick's drive-in was just about the biggest attraction.

The restaurant was 600 square feet, not nearly as large as the examples in Los Angeles, but it had an unusual octagonal shape.

With the slightly sloping roof-to-counter glass window that took up half the facade, the brothers violated one of the most important principles of the hospitality industry: don't let customers see into your kitchen.

Inside you could not sit, only outside was a row of chairs. By the mid-1940s, this drive-in became the most popular meeting place for young people. The 20-person staff served customers in 125 parking spaces.

The McDonald brothers had 25 dishes on the menu, including pork and beef sandwiches and lean pork ribs, grilled and served with chips. The annual turnover was more than 200,000 dollars.

With their flourishing business, the two brothers quickly became one of the better citizens of San Bernardino. For $90,000 they bought a 25-room villa, one of the most beautiful houses in the city. Despite the large amount of money, they remained uncomplicated and modest.

They indulged in the occasional meal in a top-class restaurant and loved the local boxing matches. They disliked air travel, in fact travel in general. They were proud to be the first in town to buy the new Cadillac model.

The old one had barely 10,000 kilometers on the clock after many years. By 1948, they had amassed more wealth than they could have ever dreamed. Dick: 'But the affair started to bore us. The money also flowed in without our intervention.'

Speed

From 1948 they had to deal with competitors, who also targeted young people. In addition, the burgeoning California industry offered higher wages, resulting in very high employee turnover.

The rowdy youngsters who made up their clientele were responsible for many broken plates and glasses; cutlery disappeared in abundance.

They were looking for a formula that would give them fewer headaches.

They decided to make speed the main feature of their trade. 'Our new concept was based on lightning fast service, low prices and high turnover,' they later said. 'We aimed for a high turnover made possible by low prices and self-service.

The carhops were way too slow. We thought there should be a faster form of service.' Speed was the keyword in every industry in those days. The brothers said they followed their intuition. In the fall of 1948 they closed their doors for three months.

They fired the waitresses and boarded up the service windows so that the customers could order from them themselves. The kitchen was converted for large-scale production. The existing grill was replaced by two twice as large.

The classic porcelain and cutlery was abolished and replaced by paper bags and plates, so that the dishwasher became superfluous. The price list contained only nine items: a hamburger, a cheeseburger, three kinds of soda, milk, coffee, fries and cake.

The hamburger slices became five grams lighter (from 50 to 45 g), but the price was halved: from 30 to 15 cents. The choice of extras was also limited: all burgers were served with ketchup, mustard, onions and two gherkins.

Separate wishes would only have resulted in a loss of time. In this way the dishes could also be prepared in advance, which was at odds with the way things go in the classic restaurant industry.

The two brothers called the concept 'Speedy Service System'. "If we had made any concessions to our customers, there would have been absolute chaos," McDonalds said.

Family restaurant

When they started again in December 1948, nothing happened at first. Since there were no more waitresses, the boys stayed away. Hesitantly, the first working-class families arrived, who could now afford a dinner out because of the low prices. The 'aquarium design', which allowed you to follow the entire preparation from the outside, turned out to be an attraction for children. 'Because we sold the burgers for 15 cents, people thought we were delivering lower quality. A look into our kitchen opened their eyes. There was a spotlessly clean grill and polished steel gleamed everywhere. They convinced themselves that our burgers were the best in the area,' the two brothers said.

The kids loved the new restaurant. They could order themselves, see everything being prepared, and meanwhile they were within eye distance of their mother, who was waiting in the car. The brothers caught on right away.

In their advertising campaigns, they promoted their business as a family restaurant where the children were pampered and welcome guests. The staff was instructed to pay special attention to the children. Turnover rose to the height of old record figures.

About a year later, McDonalds went even further in reorganizing their business. They developed a kind of conveyor belt production in their kitchen and, without realizing it, caused a revolution in the culinary world.

They split all the work into separate tasks to be performed by one member of staff at a time. This required new machines, which they had manufactured to order.

The complex preparation process turned into a series of simple routine jobs that anyone who stepped into such a kitchen for the first time in their life could perform.

The staff was divided into grill men, who put burgers on the grill all day, fry men, who only baked fries, two dressers who added the extras and wrapped the hamburger in a paper, shake men who mixed the milkshakes and three counter people taking orders.

In this way burgers could be served within thirty seconds or in an even shorter time. And labor costs fell because unskilled workers could do the work.

very comical

The success was astonishing. In 1951, sales rose to $277,000, 40% more than before the renewal. By the mid-1950s, that was $300,000. The brothers could split $100,000 in net profit each year.

One hundred and fifty customers crowded around the small burger joint during peak afternoon and evening hours.

The huge success quickly became known in the industry. Especially after the American Restaurant Magazine devoted an article to McDonalds in July 1952.

The two brothers were bombarded with letters and phone calls – up to three hundred a month – from people who wanted to get to the bottom of their secret, to take a piece of the pie. Neil Fox, a gas station owner in Phoenix, was the first to buy a $1,000 license in 1952.

By 1954 there were fifteen, ten of them under the McDonald's name. The licensees wanted to make quick money and so did McDonalds. In their wildest dreams, they never thought of checking whether their concept was being applied accurately.

The result was chaos. Years later, Dick and Mac admitted they were bad businessmen when it came to franchising. 'We had more money than we could spend,' they said, 'and we didn't feel like working any harder.

Free time was more important to us. We had always dreamed of being financially independent, and we had achieved that goal.' More money just meant more trouble with tax returns, they found.

The two men were not married and they couldn't think of anyone to leave an inheritance to. “We give everything to the church or any other organization, even if we're not churchgoers,” they said.

McDonalds gave their ideas away to anyone who wanted to hear them. Dick: 'The entire tent was made of glass, like an aquarium. We couldn't hide what happened to us. That is why we have answered all questions asked to us.

People would arrive here in droves, armed with pen and paper, and then draw a map of our kitchen. My brother and I thought that was very comical.' As they competed harder with their own concept, they started to find it less funny.

Ray Kroc

In the meantime, they had caught the attention of Ray Kroc, a sales genius who would spread the McDonald concept worldwide. Kroc was from the Chicago area and traded in multimixers for milkshakes. He thought it was strange that somewhere in the country there was a humble hamburger joint that had ten of his machines in use. In July 1954 he went to take a look. Kroc offered the McDonalds to distribute their ideas through a franchise system.

He collected 1.9% percent of the turnover, of which 0.5% went to the brothers. Franchising is the right that a central company grants under certain conditions to private entrepreneurs to use their knowledge of management and their name.

On March 2, 1955, Ray Kroc founded his firm 'McDonald's System', later transformed into McDonald's Corporation. Four years later, Kroc opened its hundredth branch.

In 1961, Ray Kroc got a call from Dick McDonald offering him the entire fast food system for $2.7 million.

There was a moment of silence on the other end of the line. "Hey, are you still there, Ray?" asked Dick. "Didn't you hear the noise?" said Ray. "I just jumped out the window." 'One million for each of us,' said Dick, 'and 700,000 for the taxman.' The moment of the offer did not suit Kroc badly.

He had just invested heavily and had to make incredible efforts to close the deal. Kroc had always thought the two brothers were stupid, naive.

When Ray Kroc, who died in 1984, was to make the McDonald system known worldwide and it turned out that their thriving primal restaurant in San Bernardino was not included in the sale, his mixed feelings towards the two brothers turned into hatred.

The McDonalds knew it would have been more interesting for them financially to keep the rights to the fast food system. But they only saw those rights as a source of misery, especially from the tax authorities.

Dick later stated that he had never regretted his decision: "I would have ended up behind a desk on the thirtieth floor of a skyscraper, with a bunch of stomach ulcers and surrounded by eight lawyers puzzling over my tax returns." The two brothers wanted a carefree life and now they were ready : 'Since the time we went bankrupt with our cinema, we have longed for financial security,' said Dick. 'We have always dreamed of how nice it would be if we were sure that we could pay the next rent.

Now that day had come. My brother and I had several Cadillacs in the garage, a house in Palm Springs, one in San Bernardino, and one in Santa Barbara.

I remember Mac once saying, "Now for heaven's sake explain to me what we're supposed to do with five million dollars; we can afford everything now.'

Hate

In the weeks following the transaction on December 28, 1961, the brothers showed their nearly $3 million checks to acquaintances and businessmen like little children. Kroc didn't contain his hatred. He opened a McDonald's one block away from where the primeval restaurant was located.

Dick and Mac were forced to remove their own name from the very first McDonald restaurant in the world: they had sold their name. They renamed their business Big M. Sales plummeted. In 1968 they also sold Big M. In 1970 the famous drive-in closed.

Today, the birthplace of the fast food industry is a music store.

Shortly after the sale, the two brothers returned to their hometown of Bedford, New Hampshire, on the East Coast. Mac died there in 1971, at the age of 69. Dick was still married and thus had a stepson and two grandchildren.

At a later age, Dick still regularly visited branches of the hamburg chain that he had founded. When he was once accompanied by his grandson Jason, the latter thought that Grandpa did not have to stand in line.

But to Jason's amazement, Grandpa Dick had to pull out his wallet himself, whereupon the grandson exclaimed, "But isn't that your name on the roof?" At the end of 1984, at the age of 75, he was allowed to publicly eat the fifty-billionth McDonald hamburger at a party in New York.

Smart guys have calculated that if Dick hadn't sold his business back then, he would be one of the richest people in the United States today, easily cashing in on $60 million a year in franchise fees alone.

He died on July 14, 1998 in New Hampshire.

triumphal arches

Dick McDonald: 'One evening in 1953 I made a few sketches for a new building. I wanted to give it more height because the architect's design seemed too low to me. I drew a large arch that ran parallel to the building and looked cheerful.

Then I drew two more that were at odds with that.' Enthusiastically, Dick took the design to Stanley Meston, a local architect. He agreed with everything except 'those terrible bows'.

"If those arches remain, you'll have to look for another architect," he threatened. 'The arches gave the whole thing a bit of spice, without it it was just a rectangular building like any other,' the brothers thought.

In order to befriend the only architect he knew, the building was first left without arches. Afterwards, Dick went to George Dexter, a billboard designer. Dexter ran a company that sold neon lighting.

That is why he immediately fell in love with the luminous 'triumphal arches', which you could also see from afar. Dick had originally envisioned them as a kind of false buttresses to make the building seem taller.

Through Dexter, they became the trademark of the new drive-thru and later the logo of McDonald's.

Ray Kroc

After the spectacular takeover in 1961, Ray Kroc continued to work furiously. In 1963 he was at the 500th restaurant, in 1968 at the thousandth. When he died in 1984, McDonalds' Corporation had 7,000 franchises and was ready for its 50-billionth hamburger.

Kroc's success story is a story unto itself.